Tuesday, February 15, 2005

Denied boarding

In two days time, a particularly insane EU regulation is due to come into force, none other than Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 "establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights."

More commonly known as the "denied boarding" regulation, this has the superficially attractive objective of requiring airlines to pay a fixed scale of compensation to passengers who suffer delays to their flights, but there is no single provision emanating from the EU which illustrates the great divide between theory and practice. Nor is there a better example of the sledgehammer missing the nut.

In principle, of course, the legislation is a wonderful example of consumer law, protecting the downtrodden passenger from the grasping, capitalist airlines who take your money and then don't deliver the goods – who get you to the airport only to tell you that the flight has been delayed or, even worse, cancelled.

Certainly, this is the line taken by GMTV which, on its website, offers viewers the chance to appear on the programme to talk about their "travel nightmares", to coincide with the commencement of the regulation, which the station says, for most travellers it can't come soon enough

But what is so wrong with this, I hear you all asking. Anyone who has used airlines at all frequently have had their gruesome experiences and what is so wrong with making the airlines pay when they foul up?

Well, as always, the devil is in the detail. Firstly, most airlines already do pay compensation, and/or make alternative provisions for delayed passengers, including putting them up in hotels, all expenses paid, when flights are delayed. This is partly due to "market forces" - airlines work in a competitive market and it does not pay to upset customers, so they tend to look after them – and partly in conformity with the 1999 Montreal Convention, which sets out basic parameters for passenger compensation.

I recall once, travelling from Malta on an Air Malta flight, when the aircraft could not gain altitude and we had to return. It took two more tries, including a nerve-shattering take-off, aborted at the last minute, before the airline gave up and cancelled the flight, leaving us with an unscheduled extra day in Malta.

But the airline was so apologetic and treated us so well, including putting us up in a top-class hotel overnight, that none of us came away with anything other then the warmest feelings for the staff who had looked after us. No EU regulations were needed and nor would they have applied, as Malta was not then in the EU.

On the other hand, I recall arriving once at Charlerois airport, for the last Rynair flight of the day, after a gruelling day in the European parliament, only to find that the flight had been delayed and then, well after midnight, cancelled without notice. Passengers were left to their own devices, without even a hint of compensation.

I recall being so, so tired, and struggling to find a hotel for the remainder of the night, barely being able keep awake. But there was no feeling of recrimination. There had been an air-traffic glitch throughout Europe and Ryanair was as much a victim as we were. So, it cost me £50 for a hotel that night, plus the taxi, but for the £10 that the flight cost to London – when before Ryanair got started, it had cost up to £320 – who was complaining? You take the rough with the smooth.

And that's the rub. This legislation catches all the airlines, the cut-price carriers and the regular, scheduled airlines. Under the new rules, passengers denied boarding to a flight could be entitled to €250 for all flights of 1500 kilometres or less; €400 for all intra-Community flights of more than 1500 kilometres, and for all other flights between 1500 and 3500 kilometres, €600.

Thus, having paid £10 for a flight, a passenger could, under certain circumstances, be entitled to £150 or more in compensation because of a delay. But, as there ain't such a thing as a free lunch, and airlines are businesses not charities. There is only one place this money is going to come from – the passengers in the form of higher fares. But such are the anticipated costs of the regulations that some previously profitable airlines may be driven out of business – reducing consumer choice and driving them into the arms of higher cost carriers.

Then, those "certain circumstances" where airlines have to cough up are by no means clearly specified in the regulations. In many cases, airlines have to pay for circumstances entirely outside their control.

Thus, the EU, in providing what it claims to be "a high level of protection for passengers" is setting up a system that is going to cost passengers more, over terms, and is interfering in a system where the market already operates, forcing an unwanted and expensive burden on commercial carriers, for which, ulitmately, their customers will have to pay.

Unsurprisingly, the International Air Carrier Association (IACA), which represents 270 cut-price charter airlines, is bitching like mad. One IATA member, Arie Verberk, chief executive of Dutch charter airline Martinair, has estimated that his compensation costs for last year would have been €500,000, had the regulation applied.

You might expect airlines to protest, but their case is of sufficient merit for them to have gained a reference to the ECJ in the British High Court. Not least, they argued that the regulation denies air carriers any defence against claims for delays caused by extraordinary circumstances such as bad weather, or acts of third parties such as an Air Traffic Control strike.

But what is a shame is that mindless television hacks like those from GMTV, and others, are crowing that the regulations are good for passengers. They are not. They are madness and everyone, including the media, should be saying so.